Results Briefing Session for the Six-Month Period
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1 Statements made in this document with respect to SQUARE ENIX HOLDINGS CO., LTD. and its consolidated subsidiaries' (together, “SQUARE ENIX GROUP") plans, estimates, strategies and beliefs are forward‐looking statements about the future performance of SQUARE ENIX GROUP. These statements are based on management's assumptions and beliefs in light of information available to it at the time these material were drafted and, therefore, the reader should not place undue reliance on them. Also, the reader should not assume that statements made in this document will remain accurate or operative at a later time. A number of factors could cause actual results to be materially different from and worse than those discussed in forward‐looking statements. Such factors include, but not limited to: 1. changes in economic conditions affecting our operations; 2. fluctuations in currency exchange rates, particularly with respect to the value of the Japanese yen, the U.S. dollar and the Euro; 3. SQUARE ENIX GROUP’s ability to continue to win acceptance of our products and services, which are offered in highly competitive markets characterized by the continuous introduction of new products and services, rapid developments in technology, and subjective and changing consumer preferences; 4. SQUARE ENIX GROUP’s ability to expand international success with a focus on our businesses; and 5. regulatory developments and changes and our ability to respond and adapt to those changes. The forward‐looking statements regarding earnings contained in these materials were valid at the time these materials were drafted. SQUARE ENIX GROUP assumes no obligation to update or revise any forward‐looking statements, including forecasts or projections, whether as a result of new information, subsequent events or otherwise. The financial information presented in this document is prepared according to generally accepted accounting principles in Japan. 2 Financial Results Six‐Month Period Ended September 30, 2014 3 Financial Results(Consolidated) Six‐Month Period Ended September 30, 2014 (Billions of Yen) Apr‐Sep 2013 Apr‐Sep 2014 Changes %% Net Sales 61.7 100% 73.1 100% 11.5 Operating Income 4.7 8% 8.5 12% 3.8 Recurring Income 5.7 9% 8.9 12% 3.3 Net Income 2.6 4% 5.7 8% 3.1 Apr‐Sep 2013 Apr‐Sep 2014 Changes Depreciation and Amortization 2.9 3.3 0.4 Capital Expenditure 2.5 3.0 0.5 4 Financial Results (Consolidated) by Segment for the Six‐Month Period Ended September 30, 2014 1. Results for the Six‐Month Period Ended September 30, 2014 (Billions of Yen) Digital Eliminations Amusement Publication Merchandising Total Entertainment or unallocated Net Sales 43.8 21.3 6.2 1.9 (0.1) 73.1 Operating Income 7.9 2.4 1.8 0.6 (4.1) 8.5 Operating Margin 18.1% 11.1% 28.8% 31.5% - 11.6% 2. Results for the Six‐Month Period Ended September 30, 2013 (Billions of Yen) Digital Eliminations Amusement Publication Merchandising Total Entertainment or unallocated Net Sales 30.6 25.0 4.6 1.6 (0.2) 61.7 Operating Income 3.5 3.7 1.0 0.4 (3.8) 4.7 Operating Margin 11.3% 14.9% 21.4% 21.7% - 7.6% 3. Changes(1‐2) (Billions of Yen) Digital Eliminations Amusement Publication Merchandising Total Entertainment or unallocated Net Sales 13.1 (3.7) 1.6 0.3 0.1 11.5 Operating Income 4.5 (1.4) 0.8 0.3 (0.3) 3.8 5 Revisions to Consolidated Results Forecasts for the Fiscal Year Ending March 31, 2015 Previous (Billions of Yen) Fiscal Year Fiscal Year Ending 3/15 Changes Ended 3/14 (Forecast) Net Sales 155.0 140.0~150.0 (15.0)~(5.0) Operating Income 10.5 5.0~10.0 (5.5)~(0.5) Recurring Income 12.5 5.0~10.0 (7.5)~(2.5) Net Income 6.6 3.5~6.5 (3.1)~(0.1) Revised (Billions of Yen) Fiscal Year Fiscal Year Ending 3/15 Changes Ended 3/14 (Forecast) Net Sales 155.0 150.0~160.0 (5.0)~5.0 Operating Income 10.5 11.0~16.0 0.5~5.5 Recurring Income 12.5 11.0~16.0 (1.5)~3.5 Net Income 6.6 7.0~10.5 0.4~3.9 6 Financial Forecasts by Business Segment: Fiscal Year Ending March 31, 2015 Each business segment’s forecast number for the Fiscal Year ending March 31, 2015 corresponds to the intermediate scenario in the forecast range (consolidated net sales of Yen150B‐160B, and consolidated operating income of Yen11B‐16B). 1. Forecast for the Fiscal Year ending March 31, 2015 (Billions of Yen) Digital Eliminations Amusement Publication Merchandising Total Entertainment or unallocated Net Sales 100.0 41.5 10.5 3.0 (0.0) 155.0 Operating Income 14.1 4.0 2.8 1.0 (8.4) 13.5 Operating Margin 14.1% 9.6% 26.7% 33.3% - 8.7% 2. Results for the Fiscal Year ended March 31, 2014 (Billions of Yen) Digital Eliminations Amusement Publication Merchandising Total Entertainment or unallocated Net Sales 94.6 47.0 10.2 3.8 (0.5) 155.0 Operating Income 10.7 4.5 2.3 1.1 (8.1) 10.5 Operating Margin 11.3% 9.6% 22.4% 29.4% - 6.8% 3. Changes (1 ‐ 2) (Billions of Yen) Digital Eliminations Amusement Publication Merchandising Total Entertainment or unallocated Net Sales 5.4 (5.5) 0.3 (0.8) 0.5 (0.0) Operating Income 3.4 (0.5) 0.5 (0.1) (0.3) 3.0 7 Digital Entertainment Segment-Net Sales (Billions of Yen) ■ HD Games 150.0 ■ Games for Smart Devices/PC browser ■ MMO About 100.0 100.0 94.6 89.5 71.9 64.2 47.3 55.6 50.0 49.0 43.8 42.1 27.2 14.8 22.7 17.6 12.9 16.1 20.0 9.2 11.1 11.4 0.0 6.8 Apr‐Sep 2015/3 2011/3 2012/3 2013/3 2014/3 2014 (Forecast) Net Sales of Digital Entertainment segment expected to increase for 5 consecutive fiscal years. 8 HD Games: Ratio of Net Sales ‐ Download vs. Package HD Games : Ratio of Net Sales of Download and Package Games by Region - (Apr Sep 2014) Sales of download games Japan North America Sales of package games Global 17.2% 36.8% 63.2% 82.8% 32.6% Europe 67.4% 36.4% 63.6% The figures do not include distribution sales of games developed by other companies. 1/3 of net sales in HD games are generated through digital download. 9 9 Progress in Business Segments 10 Digital Entertainment Segment New major titles for smart devices released, and more to come. Expanding overseas businesses, primarily in Asia; ・Introducing new titles for online and smart devices through business alliance with local partners. ・Introducing “FFXIV: A Realm Reborn” to the mainland China in this summer. Reviewing title development policies at domestic and overseas studios to establish extensive and rich pipeline, in order to boost asset turnover and lower risks. 11 Major Titles for Smart Devices ‐ Latest Top Ranking of F2P Game Apps (in Japan) Top 20+ (alliance with DeNA Co., Ltd.) Top 50+ Top 100+ ‐ The above information is based on figures from September through October 2014 and other data. Above ranks are unequable and vary constantly. ‐ Several single download games are ranked in the Top 100. ‐ More high‐potential games in development and to be released. © 2014 ARMOR PROJECT/BIRD STUDIO/SQUARE ENIX All Rights Reserved. Developed by Cygames, Inc. ©SQUARE ENIX CO., LTD. ©DeNA Co., Ltd. (C) 2014 SQUARE ENIX CO., LTD. All Rights Reserved. (C)2013, 2014 SQUARE ENIX CO., LTD. All Rights Reserved. (C)TAITO CORP.1994,2014 ©2013 ARMOR PROJECT/BIRD STUDIO/SQUARE ENIX All Rights Reserved. © 2013 佐島 勤/KADOKAWA アスキー・メディアワークス刊/魔法科高校製作委員会 © 2014 SQUARE ENIX CO., LTD. All Rights Reserved. Developed by BeXide,Inc. 12 Overseas Expansion: Centered on the Asia Region ‐ FINAL FANTASY XIV for China released in August 2014 ‐ The very first FF franchise title launched in China. ‐ Adopt a pay‐as‐you‐go model in the Chinese market dominated by F2P → Succeeded in acquiring loyal users of the FF franchise. ‐ Continue a mid‐long term expansion of the FF brand. (alliance with Shanda Games Group) ‐ FINAL FANTASY XIV for Korea scheduled in 2015. Alliance with Actoz Soft of the Shanda Games Group. ‐ Cross Gate (native app version) released in July 2014 (alliance with Perfect World) Retaining strong performance after 3 months from its release. ‐ Puzzle Bobble in China Currently in open beta phase. Launch this winter. (alliance with Qihoo 360) ©2010‐2014 SQUARE ENIX CO., LTD. All Rights Reserved. ©TAITO CORP.1994,2014 ©SQUARE ENIX CO., LTD. All Rights Reserved. 13 (パーフェクトワールドと提携) Portfolio Development –Emerging Markets Target markets to develop. Markets where we are already doing business. © 2006‐2009 Sankakukei, InoueKeisuke 14 Establishing Pipeline ‐ Extensive and Rich Pipeline Online Multiplayer MMO Smart Devices / Arcade LIVE Games ・・・ (alliance with ・・・DeNA Co., Ltd.) ・・・ Blockbuster ・・・ Games © 2010 ‐ 2014 SQUARE ENIX CO., LTD. All Rights Reserved. ©2012‐2014 ARMOR PROJECT/BIRD STUDIO/SQUARE ENIX All Rights Reserved. © 2002‐2014 SQUARE ENIX CO., LTD. All Rights Reserved. © 2014 ARMOR PROJECT/BIRD STUDIO/SQUARE ENIX All Rights Reserved. Developed by Cygames, Inc. (C) 2014 SQUARE ENIX CO., LTD. All Rights Reserved. ©SQUARE ENIX CO., LTD. ©DeNA Co., Ltd. NOSGOTH® © 2013 SQUARE ENIX®, LTD, All Rights reserved. TRIAD WARS™ © 2014 Square Enix™, Ltd. All Rights reserved. © 2014 SQUARE ENIX CO., LTD. All Rights Reserved. © SQUARE ENIX CO., LTD.